Company for each barrel of oil taking into account hedging

Assignment Help Financial Management

Reference no: EM132069765

A company will need to sell 10,000 barrels of oil in June 2010. To hedge this position they enter short positions in 10 oil futures contracts (each representing 1,000 barrels of oil) with delivery in July 2010. The futures price when they enter these positions is $97 per barrel. On June 18, 2010 the company enters long positions in 10 oil futures contracts with delivery in July 2010 to close their existing short positions. At this time they also sell 10,000 barrels of oil in the spot market. The spot market price on June 18 is $100.25 per barrel. The futures price for delivery in July 2010 on June 18 is $99.75.

How much money (in total $) was made or lost as a result of the futures positions?

How much was effectively received by the company for each barrel of oil taking into account hedging?

Reference no: EM132069765

Questions Cloud

What is the new intrinsic value of the stock : What is the projected dividend next year and what is the new intrinsic value of the stock?

Contemporary issues in hrm : What formal policy recommendations would you suggest to move your company towards this stage of morality?

What would you expect this annualized return to converge to : At the 5 year maturity date, what would you expect this annualized return to converge to?

Find the maturity risk premium for given year security : The real risk-free rate is 3.5%, and inflation is expected to be 2% for the next 2 years. A 2-year Treasury security yields 8.5%.

Company for each barrel of oil taking into account hedging : How much was effectively received by the company for each barrel of oil taking into account hedging?

How much money do they need to put into the account today : How much money do they need to put into the account today to ensure that they will have $110,000 in 7 years?

Explain the cash-and-carry strategies : In real-life borrowing rates are higher than lending rates. Suppose that you can borrow at r = 4% but can only invest at r = 1%. Both rates are annualized.

Develop knowledge and understanding of effective leadership : Anatomy - develop knowledge and understanding of effective leadership as required by a practising or potential middle manager

Quotations concerning the concept of a sense of community : Below are two quotations concerning the concept of a sense of community. Please use these to respond to the prompt:

User Account

All Pages